Bank of Hawaii (NYSE:BOH) Is Due To Pay A Dividend Of $0.70
The board of Bank of Hawaii Corporation (NYSE:BOH) has announced that it will pay a dividend of $0.70 per share on the 14th of June. The dividend yield will be 6.0% based on this payment which is still above the industry average.
While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Bank of Hawaii's stock price has reduced by 37% in the last 3 months, which is not ideal for investors and can explain a sharp increase in the dividend yield.
View our latest analysis for Bank of Hawaii
Bank of Hawaii's Dividend Forecasted To Be Well Covered By Earnings
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.
Having distributed dividends for at least 10 years, Bank of Hawaii has a long history of paying out a part of its earnings to shareholders. Based on Bank of Hawaii's last earnings report, the payout ratio is at a decent 53%, meaning that the company is able to pay out its dividend with a bit of room to spare.
Over the next year, EPS is forecast to fall by 6.7%. But if the dividend continues along recent trends, we estimate the future payout ratio could be 61%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.
Bank of Hawaii Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2013, the dividend has gone from $1.80 total annually to $2.80. This means that it has been growing its distributions at 4.5% per annum over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.
Bank of Hawaii May Find It Hard To Grow The Dividend
The company's investors will be pleased to have been receiving dividend income for some time. However, Bank of Hawaii has only grown its earnings per share at 3.5% per annum over the past five years. Bank of Hawaii is struggling to find viable investments, so it is returning more to shareholders. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.
We Really Like Bank of Hawaii's Dividend
Overall, we like to see the dividend staying consistent, and we think Bank of Hawaii might even raise payments in the future. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All of these factors considered, we think this has solid potential as a dividend stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Bank of Hawaii that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
